Table of Contents
Importance of cross-border trade between Mexico and the United States Risks and vulnerabilities faced by cross-border trade in the face of cyber threats Specific cyber risks faced by the transport and logistics sector
More than ever, technology and cybersecurity are essential to international trade. We will examine their impact on trade relations between the United States and Mexico in this blog post. We will also look at the potential and difficulties of enhancing border security and trade efficiency with the help of technologies like blockchain and artificial intelligence.
Cybersecurity and Technology Impact
International Trade and Cybersecurity
International trade is an economic activity that generates enormous benefits for the development of countries and regions. This is due to the exchange of goods, services, knowledge, and resources.
Thanks to international trade, we can access more varied, cheaper, and better quality products; we can learn from other cultures and ways of life; and we can take advantage of the opportunities for growth, innovation, and employment that the global market offers us.
Looking at the color palette, only some things are rosy, and speaking of the grays. International trade also involves a series of risks and challenges, especially in the field of cybersecurity, which can affect the confidentiality, integrity, and availability of the information that is processed, stored, and transported through the interconnected information systems.
According to a study, global e-commerce sales alone are expected to reach $7.1 trillion in 2024, which is only a fraction of the total volume of business generated by the Internet. However, cybercrime is predicted to cost the world $9.5 trillion in 2024, which is equivalent to 14.6% of the global GDP. This means that cybercrime could cause losses of hundreds of billions of dollars for companies every year.
Isn't it true that not everything is beautiful? Cyberattacks can negatively affect national security, competitiveness, innovation, and reputation of the companies and countries involved in international trade. An example of this was the cyberattack suffered by SolarWinds, which affected more than 18,000 customers, including several government agencies and corporations in the United States.
Given this situation, that is why we stress, and emphasize to adopt measures and good practices to protect your companies from cyber threats, both at an individual and collective level, both nationally and internationally. Without making it too long, the objective of this article is to analyze the importance of cybersecurity for cross-border trade, based on a key point such as trade between Mexico and the United States.
Importance of cross-border trade between Mexico and the United States
Cross-border trade between Mexico and the United States is one of the most notable and integrated in the world, and represents an engine of growth and development for both countries. According to WTO data, the value of bilateral merchandise trade between Mexico and the United States amounted to 614.5 billion dollars in 2022, which is equivalent to 15.4% of the total trade of the United States and 80.6% of the total trade of Mexico. It should be remembered that both countries are part of the Treaty between Mexico, the United States, and Canada (T-MEC), which entered into force in 202 and seeks to deepen the economic and commercial integration of North America.
Within this context, the case of Laredo, Texas, is especially relevant, as it is the mainland port of North America and the second most important port of the United States, after Los Angeles. Laredo is the gateway to and from most of the cross-border trade between Mexico and the United States and connects both countries with the rest of the world through its logistics and transport infrastructure. These products are part of regional value chains that generate employment, investment, and competitiveness for both countries.
Risks and vulnerabilities faced by cross-border trade in the face of cyber threats
As we have said before: we have become more dependent on technology and cross-border trade is no exception. Mexico and the United States increasingly rely on information and communication technologies (ICT) to facilitate and expedite customs, logistics, and financial processes. However, on the opposite side of the balance, the use of ICT also implies a series of risks and vulnerabilities that cross-border trade faces in the face of cyber threats.
One of the industries most impacted by cyberattacks is logistics and transportation, which move large volumes of goods and data daily between Mexico and the United States. This complex sector also depends on complex and interconnected systems such as GPD, RFID, EDI, ELD, and IoT, which facilitate the traceability, efficiency, and security of operations. However, these systems are also vulnerable to cyber threats that can compromise the integrity, availability, and confidentiality of information and goods. We will take a look at some risks faced by the transport and logistics sector.
Specific cyber risks faced by the transport and logistics sector
Cargo theft consists of unauthorized access or manipulation of the systems that locate or track goods, allowing criminals to divert, intercept, or steal shipments.
Credit card fraud, which consists of illegal or fraudulent use of customer or supplier credit card data, can result in financial losses, legal claims, and reputation damage.
Liability for damages to third parties, which consists of a breach of contractual or legal obligations with customers or suppliers, due to the interruption or alteration of operations by a cyberattack, which can result in compensation, fines, or sanctions.
Lack of adequate insurance coverage, which consists of the insufficiency or non-existence of an insurance policy that covers the specific cyber risks of the transport and logistics sector, can leave companies unprotected or underinsured against possible damages or losses.
Technology in Cross-Border Trade
It is necessary to adopt measures and good practices that allow to protect and facilitate the flow of goods and data between Mexico and the United States. These measures and good practices should be based on the use of advanced technologies, which offer innovative and effective solutions to improve the security and management of the borders, both at the national and international levels. Based on a joint publication made by the WTO and the WCO.
Blockchain and distributed ledger technology
Is a time-stamped, decentralized, and distributed digital record (or ledger) of transactions in which the transactions are stored securely in a permanent and near inalterable way using various cryptographic techniques. For example, the United States Customs and Border Protection (CBP) conducted a PoC in September 2018 on the application of blockchain technology in the submission process for entry summary declarations under the CAFTA and trade with Canada and Mexico.
Blockchains enhance data quality, immutability, and accuracy in customs declarations by collecting information from primary sources, eliminating burdensome supporting documents, and providing real-time data elements for analysis and risk management.
Internet of Things
IoT is the network of sensors and smart devices connected to the Internet that can send and receive data. IoT enables the tracking of products along the supply chain and can reduce the costs of global trade by increasing the efficiency of shipping and transport. The main benefit of IoT for customs authorities is to enhance the volume and variety of data, which in turn helps to achieve improved risk management, greater efficiency in customs clearance processes, and better analytics.
Big data, data analytics, artificial intelligence, and machine learning
Big data is the use of advanced analytic techniques on very large and diverse datasets (starting from terabytes) with different sources and degrees of complexity.
AI refers to systems that change behaviors without being explicitly programmed, based on data that are observed collected, and then analyzed.
These 3 are not mutually exclusive, and customs authorities often use them in combination. For example, blockchain, in combination with IoT, provides new ways to track the journey of products.
In the current digital era, technology and cybersecurity are essential for guaranteeing safe and effective cross-border trade between Mexico and the United States to safeguard trade flows and data, best practices and measures must be put into place, encouraging collaboration among all parties. In the end, the success and sustainability of cross-border trade in the digital age depend on its security.
We hope that reading this article has sparked your interest in the subject and inspired you to find out more about the potential applications of technology and cybersecurity to global trade.